measures to prevent forged indorsements on instruments payable to the
the loss" in the event of a forged indorsement on a check.
Liable For Collecting an Item With a Forged Indorsement, 28 AKRON L.
(63) There is a tension that arises from the language when reading these provisions together: whether the note is required to be negotiated by indorsement (64) and that the assignee must have physical possession of the note, or whether an assignment of the note (without negotiations or possession) is sufficient.
The language in section 3-202(2) implies that it is the original note that must have the indorsement (either directly on the note, or on a paper "so firmly affixed" to the original note).
As with indorsement, this holder-in-due-course feature made negotiable debt more acceptable in exchange.
In particular, while the concept of holder in due course is of limited applicability in modern situations (see for example, Mann 1999, 445-47) the notion of indorsement and the conditional liability that it implies are still relevant.
Third, the requirement of indorsement and delivery is necessary to ensure that the securitization trust takes the mortgage notes free from competing claims.
(263) If there is only one original negotiable note, it can be transferred only once by any party through indorsement and delivery, and the party that takes physical possession with proper indorsement for value and in good faith will be a holder in due course and free from competing claims, thereby avoiding the warehouse-fraud problem.
1965) (unauthorized indorsement deprived plaintiff of holder in due course status, thus, permitting defense on instrument).
2010) (Bank filed original note, but indorsement was to a different bank).
(95) Reification also enables transfer by indorsement
creates a chain of title that travels with the instrument and provides an easy, objective manner for establishing who has rights to the instrument.